Monday, December 22, 2008

The politics of national climate legislation

In a recent post, CGS touched on the political difficulties confronting national climate legislation. Following the most recent round of European Union (EU) negotiations on its cap-and-trade scheme, new insights into these difficulties are worthy of comment.

The Economist reports that, in contrast to earlier proposals to auction off all emissions permits,
With recessionary winds swirling, the summit agreed big concessions to countries that worried about spiralling electricity bills for consumers, or job losses through “carbon leakage”: jargon for factory owners shutting up shop and relocating to parts of the world that do not penalise greenhouse gases. A new clause allows the EU’s poorest, most coal-dependent countries to receive up to 70% of their allowances for industrial carbon emissions free initially.

Eventually, all permits will have to be bought via auctioning, generally viewed as the fairest and most effective way to allocate permits initially. In the meantime, however, it's clear that political negotiations have gotten the better of ecological imperatives. Indeed, the outcome of the EU negotiations even betrayed a notable degree of cynicism, including the stipulation that "if other big polluters do not sign up to binding curbs at Copenhagen next year, heavy industrial sectors vulnerable to foreign competition would receive up to 100% of their allowances free—but only if they meet 'benchmarks' for using the cleanest available technology" (from The Economist).

Frighteningly, the EU can still lay claim to the most robust emissions reduction framework in the world. The outcome of these latest negotiations may represent a reasonable political compromise, but they fail to acknowledge the ecological imperatives of accelerating climate change. This all bodes ill for America's forthcoming efforts to create a domestic cap-and-trade system; all signs are that the American political environment is less climate-friendly than its European counterpart.

As for China, the watering-down of the EU's cap and trade system is likely to reduce developed-country leverage in the near-term. The consequence may be that big developing nations will be less likely to take on emissions-reduction commitments. As The Economist reports elsewhere, the lack of rigor in developed-country cap and trade systems "will make it harder to resist China and India when they seek transfers of money in the name of 'solidarity'”.

Back to the drawing board, and perhaps the sub-national level?

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